Why Cognitive is Critical in Omnichannel Order Management

By Lori Angalich | Wed, Jul 18, 2018

For retailers as well as B2B companies, order fulfillment plays a major role in both customer satisfaction and profitability. Customers expect flawless, fast order fulfillment across all channels. While customer-centric companies work hard to meet these expectations, it can be very expensive to do so.

As customers purchase from your company across multiple channels—via the Web, mobile apps, kiosks, marketplaces, retail locations, and even catalog and telephone orders—you’ll want capabilities like centralized order orchestration, ship from store, drop ship, and real-time inventory visibility. These order management capabilities work together to meet customers’ expectations seamless, fast and error-free order fulfillment.

However, these capabilities alone don’t ensure companies can do so profitably. In fact, while many CEOs have identified omnichannel commerce as a top priority, the IBM Consumer Expectations Study found that it could cost up to three times more to serve omnichannel customers.

Every channel adds complexity to the order fulfillment process. In addition, there’s pressure from customers and competitors to same-day or two-day shipping, making it even more critical to leverage modern technologies to fulfill orders in the most efficient, cost-effective way possible. In fact, the IBM study found that 72 percent of consumersconsider two-day or less shipping as a factor when making a purchase.

On top of using an omnichannel order management system, companies are now adopting solutions that can apply human reasoning and cognitive capabilities to order fulfillment. As a result, they’re able to meet or exceed customer expectations while reducing their fulfillment costs. Let’s take a closer look.

Traditional Order Management Systems Create Constraints

Many traditional order management solutions leverage rules in determining how or where to fulfill an order. These rules-based engines can hamstring themselves. For example, location-based rules may prevent an in-stock item in a retail location from being shipped to a customer in another state—even though that item has little demand in the current location. In the end, the customer doesn’t get the product they want, and the item remains on the shelf at the store. The company loses the sale and possibly loses the customer to a competitor.

These types of systems often are inflexible and do not analyze real-time data from multiple sources—such as weather-related information—to find the best way to get the product into the hands of the end customer.

Often, manual intervention is required—which means manually combing through data to find the best way to re-route orders due to demand and delays. This is not only unsustainable long-term, but it also makes it difficult—if not impossible—to meet customers’ ever-increasing expectations in the age of Amazon.

AI and Cognitive Capabilities Optimize Costs and Decision-Making

Cognitive capabilities and artificial intelligence have a chance to shine in order management and fulfillment by proactively identifying emerging trends, aggregating real-time information from multiple sources, and adjusting sourcing based on this information so that orders are fulfilled quickly.

A solution like IBM Order Optimizer can provide a full view of omnichannel systems by analyzing existing data in order management systems, as well as data from other systems in your order fulfillment network. Its advanced optimization algorithms will prove to be critical to find ways to lower costs while still meeting service level agreements and expectations.

Artificial intelligence and cognitive capabilities also help employees make better decisions. They can aggregate and analyze order, customer, inventory, and fulfillment data—reviewing billions of possible combinations to present suggestions to employees. In turn, this helps with decisions around sourcing, inventory, logistics, and vendors to anticipate and balance customer expectations with the ever-present pressure to lower costs and increase efficiency.

Meeting Expectations for Flexibility, Visibility and Speed

Optimizing order fulfillment involves much more than just executing the most efficient shipping method. Customers also want to choose where they receive their products. For example, ship-to-store and buy online pick up in store (BOPIS) are two ways customers in a hurry (or with questionable mail delivery) may want to receive their orders.

Intelligent order management systems support this, enabling customers to choose how their products are shipped—and see the progress of their order. For example, IBM Order Management uses intelligence to ship to stores via the fastest, most cost-effective methods possible—but also from the best source for each and every item in the order. Additionally, it can aggregate data from multiple customer touchpoints to provide a single view of order fulfillment to the customer.

Improving Ability to Predict and Meet Demand

Using artificial intelligence and cognitive capabilities can help organizations proactively fulfill orders by predicting demand. They leverage inventory and fulfillment history, customer demographics and other data, to pinpoint emerging trends.

For example, if a certain demographic consistently purchases the same item on Black Friday, knowing the specifics can help manufacturers and retailers ramp up production with the best suppliers and have inventory stocked in the best locations to meet the demand come November.

Additionally, by analyzing weather conditions and identifying trends that will increase demand for certain products, organizations can stock up in the locations where demand will surge and shift inventory from stores and fulfillment centers where demand is much lower.

The capabilities found in these cognitive commerce solutions are transforming order management and fulfillment in so many ways—from predicting and anticipating demand to proactively rerouting and fulfilling orders from multiple locations. They empower employees with better information to make great decisions, and customers receive their orders the way they want—with fewer delays or errors.

Learn more about how companies are improving order fulfillment while reducing costs by downloading the Aberdeen Group report, Omni-Channel and Cost-to-Serve Trends, Capabilities and Readiness.

About the Author

Lori Angalich is the VP of Marketing at Lightwell. She loves exploring new technologies and business models, learning how things work, solving problems, and working with others to develop new ideas. She has a Bachelor of Science in Biology and an MBA in Marketing, and she enjoys applying her knowledge from both each and every day. Lori has a passion for travel, art, wine, music, wildlife (including her two dogs, who are a bit on the "wild side"), and most of all, creating great memories with her family.